The impact of an organisation’s transactional culture after a retrenchment

We do, as you might imagine, hear some very interesting stories about the inner workings of a range of organisations. We pick up and absorb messages about their cultures as we talk with their representatives and the people who leave them. The messages include the way decisions are made, how communication occurs and how people are engaged or left disengaged.

We have learned broadly to divide organisational cultures into those that are transactional cultures and those which build capability. Of course there are many shades of grey across multiple organisations and the dichotomy between the two types is not absolute. But for the purposes of conversation and thinking it makes it easy if we capture both ends of the spectrum.

Incidentally we have written a short paper on this topic titled “Conversations that build capability” which has recently been circulated (and placed in the Reading Room on our website).

Transactional cultures are often the outcome of command and control practices coming down from the senior leaders. In such cultures, limited latitude is given around instruction and limited two way consultation takes place. The organisation is steered very firmly by those at the top. Sometimes organisations move into this mode when urgent change is needed. At other times the transactional footprint is simply the outcome of a particular style of leadership in a new CEO.

We acknowledge there is no question that transactional, controlling organisations can thrive and grow under the right conditions. These include scenarios where the leadership team is gifted and deeply familiar with their industry and with what is needed to achieve competitive advantage.

Our observation in our many discussions with individuals is that there is a cost in these types of cultures. The cost is seen in the disempowerment of the many individuals beneath the leadership team. Something of this cost is captured in a description of the stereotypical manager in such an organisation in a paper on cultural factors in Australian organisations published by IBSA in March this year.[i]

This paper characterises the stereotypical manager as the Task Master. “The Task Manager is typically autocratic, results driven, and rarely gives feedback. This kind of manager is separate and distant (both physically and emotionally) from their people. This management style in Australia tends to turn people off… they become Whingers, then Survivors (just doing the minimum) and ultimately Prisoners (“have no choice but don’t want to be here and don’t care”). This is a style that values results over relationships.”

By way of contrast, a capability building culture is one where the practices of the leaders are long in consultation and coaching. Leaders ask questions to encourage thinking. People are engaged from within themselves rather than from a compulsion to obey their leaders. In such cultures the focus is on devolving and in turn developing expertise.

In these settings we generally see greater agility and much higher levels of engagement. There is still a place for leadership, but as the IBSA paper illustrates more of a “captain/coach” approach seems to work best in our country.

“In Australia, the Captain-Coach approach involves creating common causes, plans and goal. The Captain-Coach defuses crises, supports team members and acknowledging others identity. Such an individual leads by example rather than being demanding of others… “[ii]

How is this relevant to the work of Macfarlan Lane?

The answer is that in more than a few career transition assignments, we are seeing the casualties of transactional cultures. These are individuals for whom the news of their redundancy was handled insensitively, with no compassion. In some instances the news was broken remotely, or by someone from HR, rather than by the individual’s manager. The lack of human engagement at this most difficult of times is quite surprising.

The consequences are that individuals in this circumstance are often shaken. They are then unable to get themselves moving constructively for quite some time. Some remain captured by rage. Some decline into a passive state. Others say and do irrational things and sometimes injure their reputations in the process. It is almost as if retrenchment from a transactional culture acts to release a great deal of unexpressed feeling. “Now that I am being thrown out of the place, I can finally say what I have been holding back for so long: I can get rid of the feeling of repression and restraint…”

While we encourage people to replace their anger with constructive activity, it is surprising for how long little bits of anger keep surfacing, often at unexpected times. A transactional culture, particularly when evident in the event of the termination of employment in our estimation, can cast a long shadow in the life of an individual.

[i]“ Australian Cultural Imprints at Work” authored by Colin Pidd, Liam Linley and Marie Larkin and published by DEEWR in March 2011